Methods of Setting Stop Loss Gold Orders in XAUUSD Trading

Traders using a gold trading system must have mathematical calculations that reveal where to set stop loss & take profit in gold trading.

A trader can also place set stop loss & take profit orders according to the technical indicators used to set these set stop loss & take profit orders. Certain gold technical indicators use mathematical equations to calculate where the set stop loss and take profit order should be set so as to provide an optimal exit point for xauusd trades. These xauusd technical indicators can be used as the basis for setting these set stop loss and take profit orders.

Other traders also place these set stop loss & take profit orders according to a predetermined risk to reward ratio specified in their gold trading strategy. This method of setting stop loss and take profit is dependent upon certain mathematical equations. For example a ratio of 20 pips gold stop loss can be used by a trader if the trade has potential to make 60 pips in profit: this is a risk:reward ratio of 3:1

Other traders just use a predetermined risk percent calculation of their total gold trading account balance.

To set stop loss and take profit in gold trading it is better to use one of the following methods:

1. Percent of Gold Trading Account Balance

This technique is based on the percent of gold trading account balance that the trader is willing to risk & the risk : reward ratio.

If a trader is willing to risk 2% of account balance then the trader decides how far he will set the stop loss order level based on the position size that he has bought or sold - the trader also use the risk reward ratio to calculate where to set take profit order for this trade.

Example:

If a trader has a $10,000 account & is willing to risk 2%

• If the trader buys 1 contract

  1 pip = $10

  Then setting risk at 2 %

  2% is $200

  Stop Loss = $200

  If Stop Loss Gold Order = $200 then using risk:reward 3:1 the take profit will be set at $600

2. Setting Stop Loss XAUUSD Order using Support and Resistance Areas

Another technique to set stop loss & take profit in gold trading is to use supports and resistance levels, on the xauusd charts.

Given that stop loss orders & take profit orders tend to congregate at key points, when one of these levels is touched by the xauusd price, others are set off, like dominos. Stop loss orders & take profit orders tend to accumulate just above or below the resistance or support levels, respectively. Traders should use these levels to set stop loss and take profit in gold trading depending on which side of the trade they are in.

A resistance or a support area should act like a barrier for xauusd price movement, this is why these resistance and support levels are used to set stop losses and take profits, if this xauusd price barrier is broken the xauusd price movement can go toward the opposite direction of the original gold trade, but if this barriers (support & resistance levels) are not broken the xauusd price will continue moving in the intended direction. This means that these support and resistance levels can be used as good points to set stop loss and take profit in xauusd trading.

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